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Trade Risk In Emerging-Country Farm Policies

Steps taken by major emerging economies to counter food price volatility and spur farm development have in many cases undermined international trade, the OECD said March 17.

In a report on farm policy in seven emerging countries – Brazil, Chile, China, India, Russia, South Africa and Ukraine – the Organization for Economic Co-operation and Development said common measures in recent years have included export restrictions and guaranteed prices for producers.

“While potentially increasing the supply of specific products to the domestic market, export barriers reduce supply on the world market, placing further upward pressure on prices in importing countries,” the OECD said.

There has been little pressure on countries to change trade-distorting policies because of the failure to reach a deal in the Doha round of talks at the World Trade Organization, it said.

The onset of a global financial crisis and economic downturn in the second half of 2008 may increase the tendency towards protectionism in farm policy, the OECD predicted.

It warned governments against undermining credit systems through debt rescheduling and write offs for producers, while recognizing that the global crisis has made it more difficult to obtain private credit.

Government support for the farm sector varies widely between emerging economies but remains well below levels in the industrialized countries of the OECD.

Public aid as a share of gross farm income ranged from four to 14 per cent in 2005-07 in the emerging countries studied, versus an average 26 per cent for OECD members, the organization said.



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